By Lawrence J. Kotler and Hunter C. Blume
In a recent decision, the U.S. Court of Appeals for the Third Circuit, in the case of In re Alecto Healthcare Services LLC, issued a precedential opinion affirming a debtor’s eligibility to proceed under Subchapter V of Chapter 11 and the ability of a debtor to confirm a reorganization plan that settled potential fraudulent transfer claims against the debtor’s insiders. The decision is notable for its treatment of when a debt is “contingent” and “unliquidated” for purposes of the Subchapter V debt limit and the deferential standard governing bankruptcy court approval of insider settlements over creditor objections.